Employment Newsletter (January - February 2025)

An acquittal in criminal proceedings, especially one based on benefit of doubt, does not preclude departmental disciplinary proceedings on the same allegations as they require only a “preponderance of probabilities” standard rather than “beyond reasonable doubt.”

Airports Authority of India v. Pradip Kumar Banerjee[3]

The Airports Authority of India appealed against a judgment of the Calcutta High Court's Division Bench that had set aside the dismissal of Pradip Kumar Banerjee, an Assistant Engineer. Banerjee had been dismissed from service following disciplinary proceedings for allegedly accepting illegal gratification from a contractor. Though initially convicted by a Central Bureau of Investigation’s Court, the High Court later acquitted him of criminal charges, giving him the benefit of doubt. Despite this acquittal, the Disciplinary Authority initiated fresh disciplinary proceedings, resulting in his dismissal. The Single Judge upheld this dismissal, but the Division Bench reversed it, leading to the appeal before the Supreme Court.

The Supreme Court set aside the Division Bench’s judgment, affirming that the standard of proof in disciplinary proceedings is the “preponderance of probabilities” rather than “beyond reasonable doubt” as required in criminal trials. The Supreme Court emphasized that an acquittal in criminal proceedings, especially one based on benefit of doubt rather than an honourable acquittal, does not preclude departmental proceedings on the same allegations. Furthermore, strict rules of evidence do not apply in disciplinary proceedings, meaning that confessional statements inadmissible in criminal trials may be considered, and the non-examination of the original complainant is not necessarily fatal to the case.

The Supreme Court also addressed procedural aspects, ruling that a Disciplinary Authority is not required to provide elaborate reasons in its order if it accepts the findings of the Enquiry Officer, nor must it address each ground raised by the delinquent officer. 

Workers continuously engaged for extended periods in permanent, essential functions cannot be denied employment rights through false contractor arrangements, and their termination without following proper procedures constitutes an illegal industrial practice requiring reinstatement with continuity of service and back wages.

Shripal & Anr. v Nagar Nigam, Ghaziabad[4]

The appellants were working as gardeners in the Ghaziabad Nagar Nigam's Horticulture Department since 1998-1999 without formal appointment letters and were denied minimum wages and benefits. In 2004, the appellant raised an industrial dispute seeking regularization of their services, after which the employer allegedly retaliated by delaying salaries and imposing adverse working conditions, ultimately terminating them orally in July 2005 without notice or compensation during pending conciliation proceedings. The Labour Court issued contradictory rulings—some declaring the terminations illegal with 30% back wages, others dismissing claims on grounds that the workers were engaged through contractors. The High Court partially modified these decisions, directing re-engagement on daily wages with minimum pay scale and allowing consideration for future regularization.

In its judgment, the Supreme Court reiterated that Indian labour law strongly disfavours perpetual daily-wage or contractual engagements in circumstances where the work is permanent in nature, as this practice undermines the fundamental rights and security of workers. The Supreme Court clarified that the State of Karnataka v. Umadevi[5] precedent makes a crucial distinction between appointments that are “illegal” and those that are merely “irregular,” with the latter being potentially eligible for regularization under certain conditions and stressed that this precedent cannot be used as a shield to justify exploitative employment arrangements that persist for years without legitimate recruitment processes. The Supreme Court firmly established that workers who fulfil ongoing municipal requirements year after year cannot be summarily dismissed as dispensable, particularly in the absence of genuine contractor agreements and proper statutory compliance. Furthermore, the Supreme Court determined that administrative limitations such as recruitment bans, while valid considerations, cannot trump the legitimate rights and equitable entitlements of workers who have served continuously in de facto regular roles for extended periods.

The Supreme Court in this case found that the employer failed to substantiate its contractor-based engagement claim, as no contract documentation, licenses, or invoices were provided. The pattern of direct oversight and wage disbursement by the municipality contradicted the “contractor's personnel” assertion. The Supreme Court emphasized that these workers performed essential, perennial duties integral to municipal functions, with the acknowledged gardener shortage confirming these positions were necessary. The employer effectively engaged in unfair labour practices by requiring the same tasks as regular employees while providing inadequate compensation.

Finding the terminations illegal under Sections 6E and 6N of the U.P. Industrial Disputes Act, 1947 the Supreme Court set aside the High Court's order and directed: (1) full reinstatement with continuity of service from the original termination date; (2) reinstatement within four weeks with the entire absence period counted for continuity and consequential benefits; (3) payment of 50% back wages within 3 months; and (4) initiation of a fair, transparent regularization process within 6 months. 

Vague allegations lacking specific details about "filthy language" without contextual information or gestures cannot establish criminal intent to insult modesty under Section 509 IPC, especially in employer-employee disputes where civil remedies are more appropriate than criminal proceedings initiated with mala fide intentions.

Madhushree Datta v. The State of Karnataka & Anr.[6]

A technical systems analyst at M/s Juniper Networks India Private Limited (“Company”) filed a complaint alleging she was forced to resign under duress, as she was threatened with termination and the office laptop containing her personal as well the office proprietary data was confiscated and the employer used “filthy language”.  Following these incidents, First Information Report (“FIR”) under Section 323, 504, 506, 509 and 511 of the Indian Penal Code (“IPC”) was registered against the Company, the Human Resources Manager of the Company and the security guard (“Appellants”).  

The Appellants sought relief before the High Court of Karnataka including quashing of the chargesheet filed and the entire proceedings which was held before the Additional Chief Metropolitan Magistrate. The High Court dismissed their petition and accordingly, the appellants approached before the Supreme Court, which quashed the criminal proceedings against the appellants.

The Supreme Court observed significant discrepancies, particularly noting that allegations of "filthy language" appeared only in the chargesheet but were absent from both the original complaint and FIR.  The Supreme Court further emphasized that within the employer-employee context, such vague allegations without specific words, contextual details, or accompanying gestures failed to establish criminal intent to insult modesty under Section 509, IPC. The Supreme Court concluded that what essentially constituted a civil dispute over employment termination had been deliberately transformed into criminal proceedings with mala fide intentions to "wreak vengeance, cause harm, or coerce a settlement." Invoking the maxim “res ipsa loquitur” (the thing speaks for itself), the Supreme Court set aside the Karnataka High Court's order and quashed all criminal proceedings against the appellants. 

Under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972 (“PG Act”), gratuity can be forfeited for misconduct involving moral turpitude without requiring a criminal conviction, and employers can determine such misconduct through disciplinary proceedings based on preponderance of probabilities.

Western Coal Fields Ltd. v. Manohar Govinda Fulzele[7]

 Maharashtra State Road Transport Corporation appealed against a decision of the High Court of Bombay that prohibited forfeiture of gratuity under the PG Act. The case involved an employee who was terminated after the employer found that the employee had obtained employment by submitting a fraudulent birth certificate. The disciplinary authority had ordered forfeiture of his gratuity.

The Supreme Court analysed Section 4(6) of the PG Act, which allows forfeiture of gratuity in specific circumstances. The Supreme Court determined that contrary to previous interpretations in Union Bank of India v. C.G. Ajay Babu[8] case, Section 4(6)(b)(ii) does not require a criminal conviction for gratuity forfeiture when misconduct constitutes an offense involving moral turpitude. The Supreme Court clarified that the statutory language does not mandate court conviction, and employers can determine moral turpitude through disciplinary proceedings based on “preponderance of probabilities “rather than the criminal standard of "beyond reasonable doubt." Drawing from Devendra Kumar v. State of Uttaranchal[9], the Supreme Court established that suppressing material information amounts to fraud and constitutes moral turpitude.

Based on this, the Supreme Court upheld the forfeiture of gratuity and ruled that criminal conviction is not necessary for gratuity forfeiture, when employee misconduct involves moral turpitude. The Supreme Court emphasized that since the appointment itself was illegal due to document forgery, the employee cannot claim “fruits of his employment by way of gratuity.”

An employer cannot retain or forfeit an employee's gratuity based on allegations of financial loss without first initiating proper recovery proceedings that give the employee an opportunity to contest these claims, even when the employee has been dismissed from service for misconduct.

Central Warehousing Corporation v. G C Bhat & Anr.[10]

The Karnataka High Court dismissed a petition by Central Warehousing Corporation (“CWC”) challenging an order that directed CWC to pay gratuity to GC Bhat, an employee who was dismissed from service on serious charges of misappropriation and misconduct. The CWC had withheld Bhat's gratuity amount claiming they were entitled to adjust it against losses allegedly caused by his misappropriation. The High Court ruled that the CWC could not retain or forfeit gratuity without first initiating proper recovery proceedings against the employee. The Court emphasized that while dismissal serves as a punishment following proper procedures, it doesn't automatically allow for restitution of losses. The judgment highlighted that the employer must initiate separate recovery proceedings, providing the delinquent employee an opportunity to contest these claims. The High Court noted the CWC’s failure to initiate such proceedings meant their claims of losses remained mere contentions without proper adjudication. The High Court also pointed out the CWC’s own delinquency in not pursuing recovery of the losses, thus directing the CWC to pay the gratuity amount to the employee by January 31, 2025.

An employee who never availed maternity leave for her previous children from a first marriage should be entitled to maternity leave for a child from her second marriage, as the rule limiting leave to women with fewer than two surviving children should be interpreted to allow availing the benefit twice during service rather than strictly based on number of pregnancies.

C. Kohila v The Additional Chief Secretary & Ors.[11]

C. Kohila, a staff nurse at Government Rajaji Hospital, Madurai, filed a writ petition before the Madras High Court challenging the rejection of her maternity leave request. Kohila had two children from her first marriage (born in 2009 and 2012) while working as a contract employee, during which she never claimed maternity leave benefits. After her divorce in 2020, she remarried and became pregnant with her third child. When she applied for 365 days of maternity leave from August 2024 to August 2025, the hospital administration rejected her request on the grounds that it was her third pregnancy. The case centred around the interpretation of Rule 101(a) of Fundamental Rules of the Tamil Nadu Government, 1922, which restricts maternity leave to women government servants with less than two surviving children.

The Madras High Court, in its judgment dated January 21, 2025, ruled in favour of Kohila, stating that since she had never availed maternity leave for her first two children, she should be entitled to the benefit for her third child. The High Court emphasized that the rule should be interpreted to mean an employee can avail maternity leave twice during their service period, rather than being strictly tied to the number of pregnancies. The High Court set aside the hospital's rejection order and directed the authorities to grant her eligible maternity leave within 12 weeks of the order. The judgment was influenced by similar precedents, including the Supreme Court case of Deepika Singh vs. Central Administrative Tribunal[12] where maternity leave was granted for a third child in comparable circumstances.

A Labour Court should interfere with disciplinary punishment only when it is wholly and shockingly disproportionate to the misconduct, not merely on compassionate grounds, especially when dealing with proven cases of habitual and wilful misconduct that persisted despite multiple warnings and lesser penalties

Delhi Transport Corporation v Mahender Singh[13]

The Delhi Transport Corporation (“DTC”) filed a writ petition challenging a Labour Court’s award that had modified the termination of Mahender Singh, a bus driver, into compulsory retirement with pension benefits. DTC terminated the employee owing to his to unauthorized absence from January to May 2007. The employee’s service record contained eight adverse entries, seven of which related to unauthorized absences, and he had accumulated approximately 579 days of unauthorized absence in just three years. Despite multiple disciplinary actions, including stoppage of increments and reduction in pay grade, the pattern of absenteeism continued.

In his defense, the employee claimed his absences were due to personal illness and his wife’s sickness. However, the leave applications were filed after the leave periods and primarily cited the employee’s own various health issues, with no mention of his wife's illness. The Labour Court, while finding the disciplinary enquiry fair and proper and acknowledging the misconduct, considered the punishment of termination to be “slightly disproportionate” and modified the punishment to compulsory retirement with pension benefits, citing his 24 years of service.

The Delhi High Court ultimately allowed DTC’s petition and set aside the Labour Court's award. The High Court held that the punishment of termination was proportionate to the misconduct, given the employee’s pattern of habitual absenteeism despite multiple warnings. The High Court emphasized that Labour Courts should only interfere with punishment when it is “wholly and shockingly disproportionate,” and that while Labour Courts have the power to modify punishment under Section 11-A of the Industrial Disputes Act, 1947 (“Industrial Disputes Act”), this power must be exercised judiciously and not merely on compassionate grounds.

When an employer fails to act on an employee's resignation within a reasonable period of time, the resignation becomes automatically effective, and the employee retains the right to leave encashment as it constitutes a fundamental right equivalent to salary that cannot be withheld without valid statutory grounds.

Ahmedabad Municipal Corporation v. Sadgunbhai Semulbhai[14]

The respondent, a Junior Clerk employed by the Ahmedabad Municipal Corporation (“AMC”), submitted his resignation in March 2013 without depositing notice pay. The resignation was not acknowledged by AMC for months and after 8 months of submitting the resignation, the respondent was informed to deposit the notice pay. AMC did not accept the resignation for want of notice pay and the respondent failed to report to work and attained age of superannuation in April 2014.

Given that the respondent remained unauthorizedly absent from March 2013 to April 2014, AMC did not pay leave encashment to the respondent upon his retirement. Aggrieved, the respondent filed a claim in the Labour Court seeking recovery of 299 days of leave encashment. The Labour Court ruled in favor of the respondent, prompting the AMC to challenge this decision before the High Court of Gujarat.

The High Court addressed whether an employee could claim leave encashment when his resignation was neither accepted nor rejected within the stipulated period, and consequently, whether the Labour Court’s decision to grant these benefits was justified.

The High Court’s decision focused on the validity of the resignation and the right to leave encashment. The Court held that under Rule 49 of the Gujarat Civil Services Rules, 2002 the resignation of the employee became automatically effective after 90 days.  The High Court held that denying earned leave encashment violated the constitutional rights, considering it equivalent to salary and it cannot be withheld without any grounds. Since the employee had legitimately accumulated 299 days of leave (as verified by AMC’s records) and had expressed his willingness to pay the notice amount upon the acceptance of resignation, he was entitled to encashment benefits under Section 33(c)(2) of the Industrial Disputes Act.

The High Court dismissed AMC’s technical objections, emphasizing that earned leave encashment is an employee's fundamental right that cannot be denied without valid statutory grounds.

Disciplinary proceedings must be concluded within a reasonable timeframe, within 6 months as the outer limit (except in cases with unavoidable delays), and inordinate delay in concluding disciplinary proceedings violates principles of natural justice and fairness, rendering such proceedings invalid and subject to judicial intervention.

Sardar Mal Yadav v State Elementary Education and Ors[15])

The petitioner, Sardar Mal Yadav, filed a writ petition before the Rajasthan High Court due to the extraordinary delay in concluding disciplinary proceedings against him. A charge-sheet was issued to the petitioner in November 2011, and though the inquiry was completed by March 2014, the Disciplinary Authority failed to pass any final orders even after more than 12 years had elapsed. During the pendency of this petition, the petitioner retired after reaching superannuation age on January 31, 2025.

The High Court emphasized that according to the Rajasthan Civil Services (Classification, Control and Appeal) Rules, 1958, the Disciplinary Authority should have issued final orders immediately after receiving the inquiry report.

The High Court established a general principle applicable to both government and private employers, directing that disciplinary proceedings should be completed within six months as an outer limit. Only in cases with unavoidable delays should a reasonably extended period be granted, depending on the cause and nature of the inquiry. This directive creates a significant precedent for private sector employers regarding timely completion of disciplinary proceedings.

The judgment also addressed the negligence of Officers-In-Charge, noting they frequently fail to discharge their duties under Rule 233 of the Rajasthan Law and Legal Affairs Department Manual, 1999. The High Court directed that absent or inadequate assistance from Officers-In-Charge would now be “viewed seriously,” and if adverse orders are passed due to their lack of proper assistance, “it shall be treated as his/her personal responsibility and the erring Officer shall be made liable for strict disciplinary action.”

Further, the Chief Secretary of Rajasthan was directed to file an affidavit outlining improvements to the system through strict guidelines for Officers-In-Charge in all state departments. Additionally, the Chief Secretary was explicitly instructed to “direct all the departments to prepare a mechanism to conclude the Departmental Enquiries in a shortest possible time span.” This comprehensive directive extends potential precedential value not only for timelines in conducting disciplinary proceedings but also for accountability frameworks that could be adaptable to private sector contexts.

Termination of a temporary employee during sanctioned maternity leave is improper, and the employee is entitled to full salary for the approved maternity leave period, with termination taking effect only after the completion of such leave.

Ravisan and others v. State of Punjab and others & connected matters[16]

The Punjab and Haryana High Court issued a common order addressing multiple writ petitions filed by temporary employees seeking regularization and continuation of their services.

During the proceedings, in the connected matter   of Balvir Kaur v. State of Punjab and Ors[17], the High Court addressed a distinct issue concerning an employee named Balvir Kaur who was terminated while being on maternity leave.

Finding no valid justification for the action of the respondents, the High Court mandated the release of salary arrears. The Court declared that the concerned employee was entitled to her full salary for the previously approved maternity leave period and ruled that her termination would only take effect after the completion of this leave. In its order, the High Court explicitly directed the respondents to compensate Balvir Kaur for the sanctioned maternity period that had been improperly shortened, stipulating that all salary arrears must be disbursed within 8 weeks from the receipt of the court order.

The Court with respect to petitions seeking regularisation of services reiterated that, temporary employees cannot be substituted with another set of temporary workers on the same terms and conditions. However, the temporary employees may be replaced by regular employees when required. This ruling was limited to employees currently in service and would not extend to those whose employment had already been terminated.

A worker cannot be disciplined for momentary sleep induced by exhaustion from employer-mandated excessive overtime, as this constitutes an infringement of the fundamental right to adequate rest and reveals a lack of good faith in the disciplinary process.

Shri Chandrashekhar v. Divisional Controller /Disciplinary Authority, Kalyan Karnataka Road Transport Corporation [18]

The appellant, Sri Chandrashekhar, a KST constable appointed to Koppal Division on May 13, 2016, was suspended on July 1, 2024, after being found sleeping on duty on April 23, 2024. The incident was video recorded and circulated on social media, allegedly bringing disrepute to the Kalyan Karnataka Road Transport Corporation. When questioned, the petitioner explained he had taken prescribed medication and, due to exhaustion from working continuous double shifts, had taken a brief “power nap.” Critically, it was established as an undisputed fact that the appellant had been required to work double shifts (16 hours daily) for approximately 60 consecutive days due to severe understaffing, with the Vigilance Department itself having reported that only three constables were available when more were needed for proper functioning of the depot.

The Karnataka High Court quashed the suspension order, establishing important principles regarding workers’ rights to rest and sleep. The Court cited Article 24 of the Universal Declaration of Human Rights, 1948 and precedents from multiple High Courts that recognize sleep and rest as fundamental human rights. The High Court, distinguished between misconduct during normal work hours versus the exceptional circumstances of excessive mandatory overtime. The High Court ruled that the suspension in the case “suffers from want of bonafide” as it penalized the petitioner for the organization's own failure to maintain adequate staffing and reasonable work hours and ordered full reinstatement with continuity of service and back wages.